Dick Smith to close food business, blames Aldi’s ‘extreme capitalism’

Australian businessman Dick Smith has announced plans to close his food business to avoid bankruptcy.

Key points:

Dick Smith blames Aldi for company's demise

He says his business could not compete with the German food giant's "extreme capitalism"

Aldi Australia CEO said the company employs 11,500 local people

Dick Smith Foods will be phased out over the coming months.

The entrepreneur currently has 13 food products on the shelves, including a range of spreads, tomato sauce, and cereal.

The 74-year-old intends to connect individual suppliers with the major supermarket chains Coles and Woolworths to negotiate their ongoing production.

In a five-page email Mr Smith thanked industry heavyweights for their two decades of support.

"It is my melancholy duty to inform you that the decision has been made to close Dick Smith Foods Pty Ltd," he wrote.

He said he had created about $480 million for Australian farmers and processors, and given more than $10 million to charity.

"In recent times, the only way we have been able to achieve sales at an acceptable level (that would allow our products to have shelf space) is by discounting so much that we are often losing money," he wrote.

The email was sent to the managing directors of Coles and Woolworths, as well as Jeff Adams, the CEO of grocery marketing and distribution company Metcash.

"Now that I have made the decision to close Dick Smith Foods, we will be winding it down over the next 12 months," he said.

"Yes, at the present time the company is successful and viable. However, it is clear that this will not go on forever, so I have made the decision before the inevitable takes place and we are forced into bankruptcy."

Smith blames Aldi model

Mr Smith complained companies that supported Australian workers and produce could not compete with German supermarket giant Aldi — who he accused of building their success on "extreme capitalism".

"It looks as if there is nothing we can do about this," Mr Smith said.

However, in a statement Aldi Australia CEO Tom Daunt dismissed that, saying the business employed 11,500 Australians and partners with more than 1,000 local suppliers.

"At Aldi we strive to provide our customers with high-quality products at affordable prices. Losing focus of this purpose just adds costs," he said.

He said the company had started from humble beginnings in Australia, with two stores open 17 years ago.

"We are proud of the reputation we have built and feel strongly that the recognition we have earned as Australia's most trusted brand is a result of our commitment to openness, honesty and integrity in all our dealings," Mr Daunt said.